Panel To Consider Lower Sales Tax Rate But Taxing More Items

HARTFORD — The legislature's tax committee is scheduled to vote Wednesday on a plan that would lower the state's sales tax rate, but expand the number of items that are taxed, a committee co-chairman said Tuesday.

Co-Chairman Jeffrey Berger, D-Waterbury, said that the sales tax would be reduced below Gov. Dannel P. Malloy's target level of 5.95 percent, but that he would not reveal the precise number until Wednesday.

The sales tax is currently 6.35 percent, and Malloy had proposed lowering the rate in a two-step process by 2017.

The legislature's finance committee has been studying a list of sales tax exemptions that could be repealed, and a second, longer list of more than 50 services that could be taxed for the first time.

Berger said that legislators have already dropped some of the non-taxed items from consideration, such as ski facilities, bowling alleys, diet and weight-reducing centers, coin-operated laundries, racetracks and dance companies.

HARTFORD — Republican legislators issued a budget plan Friday that would restore money for social services, senior citizens and probate courts and help pay for that by enacting a one-year wage freeze for all state employees, reducing overtime payments by $220 million over two years and eliminating...

HARTFORD — Republican legislators issued a budget plan Friday that would restore money for social services, senior citizens and probate courts and help pay for that by enacting a one-year wage freeze for all state employees, reducing overtime payments by $220 million over two years and eliminating...

(CHRISTOPHER KEATING)

Berger said the whole list of potentially taxable items — before the committee removed several from consideration — would have raised $454 million in the first year and $702 million in the second year for a combined total of more than $1.1 billion over two years.

"We've narrowed our scope down,'' Berger said.

Senate President Martin Looney said the exact shape of the legislation is still fluid because the 21-member Senate Democratic caucus has not met yet, but he added that he supports the finance committee's package.

"The list of options is still sort of expanding and contracting,'' Looney said. "It makes sense to re-examine the list'' of sales tax exemptions.

Business advocates and some legislators have been opposed to imposing the sales tax on services that are currently tax-free.

Based on calculations by the legislature's nonpartisan fiscal office, applying the sales tax to engineering services, for instance, would generate nearly $95 million in the 2016 fiscal year that starts July 1.

The sales tax would also generate $34.5 million from certified public accountants, $13.6 million from payroll services, $12.5 million from architectural services and $6 million from environmental consulting services.

Lawmakers cautioned that taxing on those items is only in the discussion stage. Any tax changes would need to be approved by the House of Representatives, the Senate and Malloy.

Malloy's office declined to comment Tuesday, saying it had not seen the full details of the proposal.

The budget-writing appropriations committee voted Monday to spend more than $600 million above Malloy's proposed budget, totaling $40.47 billion over the next two years. The finance committee is required to raise the money that is being spent by appropriations, and Berger said they will "hopefully be in unison.''

The appropriations committee, by using a new definition of the state's mandatory spending cap, restored millions of dollars to popular programs that had been cut under the governor's proposed spending plan.

The change would mark the first time since the creation of the state income tax in 1991 that state employee pensions would not be included under the cap that is designed to control state spending. The new calculation sets the budget at $1.5 billion under the cap in the next fiscal year that starts in July.

Lawmakers are trying to close projected deficits of $1.3 billion in each of the next two fiscal years. After the expected vote Wednesday by the finance committee, top legislators will begin working on the final budget compromise with Malloy in coming weeks in an attempt to finish their work by the legislature's scheduled adjournment date on June 3.